And the battering of their USP continues. On the heels of Walgreens Boots Alliance (which this week proposed a merger with #3 Rite Aid to create the largest by location US drugstore chain) putting a screeching halt on expanding its 41 Theranos testing locations, the FDA has told Theranos that its nanotainers are actually ‘uncleared medical devices’ which further violate because they are being shipped over state lines. The company was also scored on handling complaints poorly, keeping poor records and failing to conduct quality audits including on the manufacture of the nanotainers. These were revealed on redacted FDA Form 483s filed as a result of a month-long inspection ending in mid-September, which were published per a Freedom of Information Act (FOIA) request. According to MedCityNews, the nanotainers were mistakenly classified as Class I and not II. Fortune quotes one of the reports: “The design was not validated under actual or simulated use conditions,” an investigator says of the validation phase of an unspecified Theranos device. Neither did it “ensure the device conforms to defined user needs and intended uses.” Theranos claims that the company addressed and corrected all the complaints within a week or less, and have documented same. The controversy over the nanotainers strike at the heart of Theranos’ Unique Selling Proposition (all the posed photos with CEO Elizabeth Holmes striking a Steve Jobs-like pose in the ash can?). Without it, they are just another lab testing company that is perhaps cheaper. Also FierceHealthIT and The Wall Street Journal (may be paywalled).